Source: sec
Source ID: 0001628280-26-069515
URL: https://www.sec.gov/Archives/edgar/data/1855175/000162828026069515/ctnm-20260930.htm
Symbol: (CTNM)
Published: 2026-11-03 16:13:35 EST
Time precision: minute
Title: 10-Q 10-Q

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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________
FORM
10-Q
_______________________________________________________________________
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number:
001-42001
_______________________________________________________________________
Contineum Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
_______________________________________________________________________
Delaware
27-1467257
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3565 General Atomics Court, Suite 200
San Diego
,
California
92121
(Address of principal executive offices)
(Zip Code)
_______________________________________________________________________
(
858
)
333-5280
(Registrant
’
s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
_______________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Class A Common Stock, $0.001 par value per share
CTNM
The
Nasdaq
Stock Market LLC
(Nasdaq Global Select Market)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
x
No
o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
x
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
x
Smaller reporting company
x
Emerging growth company
x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
o
No
x
As of October 30, 2026, the registrant had 39,265,813 total shares outstanding, of which there were
35,353,313
shares of Class A common stock, $0.001 par value per share, outstanding and
3,912,500
shares of Class B common stock, $0.001 par value per share, outstanding.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that are in some cases beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions are intended to identify forward looking statements. Forward-looking statements contained in this report include, but are not limited to, statements about:
•
the likelihood of our clinical trials demonstrating the safety and efficacy of our drug candidates;
•
the timing and progress of our current clinical trials, the expected results of these clinical trials and the timing of initiation and/or completion of our planned and future clinical trials;
•
our plans relating to the clinical development of our current and future drug candidates, including the size, number and disease indications to be evaluated;
•
Janssen Pharmaceutica NV, a Johnson & Johnson (“J&J”) company’s, plans related to the clinical development of PIPE-307;
•
our clinical translational approach, and our ability to identify and develop drug candidates that can potentially treat inflammatory and fibrotic diseases by targeting biological pathways associated with specific clinical impairment to alter the course of disease;
•
the size of the market opportunities for our drug candidates;
•
the rate and degree of market acceptance and clinical utility of our drug candidates;
•
our plans relating to commercializing our drug candidates, if approved;
•
the success of competing therapies and technologies that are or may become available;
•
the beneficial characteristics, safety, efficacy, therapeutic effects and potential advantages of our drug candidates;
•
the timing or likelihood of regulatory filings and approval for our drug candidates;
•
our ability to obtain and maintain regulatory approval of our drug candidates and our drug candidates to meet existing or future regulatory standards;
•
our plans relating to the further development and manufacturing of our drug candidates, including additional indications for which we may pursue;
•
our ability to successfully identify and complete transactions to in-license or otherwise acquire additional drug candidates, technologies, products or businesses;
•
our ability to attract and to enter into commercial arrangements with third parties who have development, regulatory, manufacturing and commercialization expertise;
•
our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available, as well as our ability to secure and maintain intellectual property regulatory rights and regulatory protections;
•
our ability to retain our senior management;
•
the need to hire additional personnel and our ability to attract and retain such personnel;
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•
the accuracy of our estimates regarding our operating runway, expenses, capital requirements and needs for additional financing;
•
the sufficiency of our existing capital resources to fund our future operating expenses, development plans and capital expenditure requirements;
•
the period during which we expect we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”) or a smaller reporting company;
•
our anticipated use of our existing cash, cash equivalents and marketable securities; and
•
other risks and uncertainties, including those described under Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.
Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements or rely on forward-looking statements as predictions of future events. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
Unless the context otherwise indicates, references in this Quarterly Report on Form 10-Q to the terms, “Contineum,” the “Company,” “we,” “our,” and “us” refer to Contineum Therapeutics, Inc. and references to our “common stock” refer to our voting Class A common stock.
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SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS
We face risks and uncertainties associated with our business, many of which are beyond our control. Some of the more significant risks associated with our business include the following:
•
We are heavily dependent on the success of PIPE-791, our lead drug candidate, which is in the early stages of clinical development. If PIPE-791, PIPE-307 or our other drug candidates do not progress through clinical development, eventually receive regulatory approval or, even if approved, are not successfully commercialized, our business will be materially adversely harmed.
•
Clinical drug development is a lengthy, expensive and risky process with uncertain timelines and uncertain outcomes. The results of earlier preclinical studies and clinical trials, including those conducted by third parties, may not be predictive of future results and unexpected adverse side effects or inadequate efficacy of our drug candidates may limit their development, regulatory approval and/or commercialization. If clinical trials for the drug candidates we develop do not meet safety or efficacy endpoints or are prolonged or delayed, these drug candidates may not receive the required regulatory approvals, and therefore could not be commercialized on a timely basis or at all.
•
We may experience delays in initiating and successfully completing the clinical trials that we conduct or intend to conduct. The FDA or comparable foreign regulatory authorities may disagree as to the design or implementation of our proposed clinical trials and/or require us to conduct additional studies or clinical trials or provide additional patient data, which could be costly, time-consuming and difficult to complete. If we are ultimately unable to obtain regulatory approval to commercialize PIPE-791 or any other drug candidates that we develop or if J&J elects not to continue to develop PIPE-307 or is unable to obtain regulatory approval to commercialize it, our business will be substantially harmed.
•
We may not be successful in our efforts to identify and develop additional drug candidates or identify additional indications for the treatment of inflammatory and fibrotic diseases. Due to our limited resources and access to capital, we must prioritize development of a limited number of drug candidates, the choice of which may prove to be wrong and adversely affect our business and prospects.
•
We have conducted, are conducting and may continue to conduct clinical trials outside of the United States. The FDA and other regulatory authorities or ethics committees may not accept data from such trials, in which case our development plans will be delayed, which could materially harm our business and financial condition.
•
We have incurred significant operating expenses since inception and anticipate that our operating expenses will continue to significantly increase for the foreseeable future. As a result, we may be unable to sustain profitability, and if we are unable to achieve sustained profitability, the market value of our common stock will likely decline.
•
We have a limited operating history and the drug candidates we have developed are in the early stages of clinical development, which may make it difficult to evaluate the prospects for our future viability.
•
We will require significant additional capital to complete the development and commercialization of PIPE-791 and the other drug candidates we select for development.
•
If J&J elects not to continue development of PIPE-307 or terminates the J&J License Agreement, or if the J&J License Agreement otherwise does not result in the successful development of PIPE-307, we will not receive future milestone payments or royalties, and our business, financial condition and results of operations will be harmed.
•
We may seek to grow our business through in-licensing transactions or otherwise by acquiring drug candidates or complementary products, technologies or businesses. The failure to properly identify these drug candidates, products, technologies or businesses, as well as the failure to successfully complete transactions or to integrate any such drug candidates, products, technologies or businesses that we do in-license or acquire with our existing business, could harm our business, financial condition and operating results.
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•
If we are unable to obtain, maintain and enforce intellectual property protection for our technology and drug candidates or if the scope of the intellectual property protection we obtain is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize and generate revenues from our drug candidates may be adversely affected.
•
We currently rely on third-party contract manufacturing organizations (“CMOs”) for the production of clinical supplies of PIPE-791 and we intend to rely on CMOs for our future drug candidates, as well as to supply the raw materials necessary to produce our drug candidates. We may elect to continue to rely on CMOs for the production of commercial supplies of PIPE-791, if approved. Our dependence on CMOs may impair our development of drug candidates and may impair their commercialization, which would adversely impact our business and financial position.
•
We rely on third parties to conduct our ongoing clinical trials of PIPE-791 and expect to rely on third parties to conduct future clinical trials of PIPE-791 and any other drug candidates that we develop. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize the drug candidates we develop and our business could be substantially harmed.
•
Our future success depends on our ability to retain our key personnel and to attract, retain and motivate qualified personnel.
•
We face significant competition from biotechnology, pharmaceutical, and medical device companies, and our operating results will suffer if we fail to compete effectively and in a timely manner.
•
Even if PIPE-791 receives marketing approval in an indication, it may fail to achieve market acceptance by physicians, patients, third-party payors, or others in the medical community necessary for commercial success.
•
We have no sales, marketing or distribution capabilities or experience. If we are unable to establish sales and marketing capabilities either on our own or in collaboration with third parties, we may not be successful in commercializing PIPE-791, even if approved.
•
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the U.S. federal district courts are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Table of Contents
CONTINEUM THERAPEUTICS, INC.
TABLE OF CONTENTS
Page
PART I.
FINANCIAL INFORMATION
Item 1.
Condensed Financial Statements (Unaudited)
1
Condensed Balance Sheets
1
Condensed Statements of Operations and Comprehensive Loss
2
Condensed Statements of Stockholders’ Equity
3
Condensed Statements of Cash Flows
4
Notes to Unaudited Condensed Financial Statements
5
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
16
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
27
Item 4.
Controls and Procedures
27
PART II.
OTHER INFORMATION
Item 1.
Legal Proceedings
28
Item 1A.
Risk Factors
28
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
83
Item 3.
Defaults Upon Senior Securities
83
Item 4.
Mine Safety Disclosures
83
Item 5.
Other Information
83
Item 6.
Exhibits
85
Signatures
86
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
CONTINEUM THERAPEUTICS, INC.
CONDENSED BALANCE SHEETS
(unaudited)
(in thousands, except share and par value data)
September 30, 2026
December 31, 2025
Assets
Current assets:
Cash and cash equivalents
$
75,198
$
75,603
Marketable securities
169,286
187,293
Prepaid expenses and other current assets
5,260
5,021
Total current assets
249,744
267,917
Property and equipment, net
848
830
Other long-term assets
300
256
Operating lease right-of-use assets
6,096
7,639
Total assets
$
256,988
$
276,642
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
641
$
1,016
Accrued expenses
4,663
6,387
Current portion of operating lease liabilities
2,724
2,341
Total current liabilities
8,028
9,744
Operating lease liabilities, net of current portion
3,542
5,909
Total liabilities
11,570
15,653
Commitments and contingencies (Note 8)
Stockholders' equity:
Class A common stock, $
0.001
par value; authorized shares—
200,000,000
at September 30, 2026 and December 31, 2025; issued and outstanding shares—
35,337,047
and
31,236,787
at September 30, 2026 and December 31, 2025, respectively.
35
31
Class B common stock, $
0.001
par value; authorized shares—
20,000,000
at September 30, 2026 and December 31, 2025; issued and outstanding shares—
3,912,500
and
6,083,338
at September 30, 2026 and December 31, 2025, respectively.
4
6
Preferred stock, $
0.001
par value; authorized shares—
10,000,000
at September 30, 2026 and December 31, 2025;
no
shares issued or outstanding at September 30, 2026 and December 31, 2025.
—
—
Additional paid-in-capital
472,573
438,072
Accumulated deficit
(
225,687
)
(
177,380
)
Accumulated other comprehensive income (loss)
(
1,507
)
260
Total stockholders' equity
245,418
260,989
Total liabilities and stockholders' equity
$
256,988
$
276,642
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
Table of Contents
CONTINEUM THERAPEUTICS, INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except share and per share data)
Three Months Ended September 30,
Nine Months Ended September 30,
2026
2025
2026
2025
Operating expenses:
Research and development
$
15,985
$
10,992
$
40,334
$
38,767
General and administrative
4,981
3,940
14,964
12,177
Total operating expenses
20,966
14,932
55,298
50,944
Loss from operations
(
20,966
)
(
14,932
)
(
55,298
)
(
50,944
)
Other income (expense):
Interest income
2,362
1,957
7,207
6,236
Other income (expense), net
(
93
)
183
(
216
)
(
114
)
Total other income, net
2,269
2,140
6,991
6,122
Net loss
$
(
18,697
)
$
(
12,792
)
$
(
48,307
)
$
(
44,822
)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities
(
934
)
118
(
1,767
)
194
Comprehensive loss
$
(
19,631
)
$
(
12,674
)
$
(
50,074
)
$
(
44,628
)
Net loss per share, basic and diluted
(a)
$
(
0.49
)
$
(
0.45
)
$
(
1.28
)
$
(
1.68
)
Weighted-average shares of common stock outstanding, basic and diluted
38,390,234
28,115,548
37,736,217
26,635,056
_____________
(a)
Basic and diluted per share amounts are the same for Class A and Class B shares.
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
Table of Contents
CONTINEUM THERAPEUTICS, INC.
CONDENSED STATEMENTS OF
STOCKHOLDERS
’
EQUITY
(unaudited)
(in thousands, except share data)
Class A and Class B
Common Stock
Additional
Paid-in
Capital
Accumulated Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders'
Equity
Shares
Amount
Balance at December 31, 2025
37,320,125
$
37
$
438,072
$
260
$
(
177,380
)
$
260,989
Exercise of stock options
66,252
—
198
—
—
198
Stock-based compensation
—
—
3,823
—
—
3,823
Net loss
—
—
—
—
(
14,456
)
(
14,456
)
Unrealized loss on marketable securities
—
—
—
(
513
)
—
(
513
)
Balance at March 31, 2026
37,386,377
$
37
$
442,093
$
(
253
)
$
(
191,836
)
$
250,041
Exercise of stock options
106,275
—
473
—
—
473
Shares purchased through employee stock purchase plan
120,757
1
779
—
—
780
Stock-based compensation
—
—
3,840
—
—
3,840
Net loss
—
—
—
—
(
15,154
)
(
15,154
)
Unrealized loss on marketable securities
—
—
—
(
320
)
—
(
320
)
Balance at June 30, 2026
37,613,409
$
38
$
447,185
$
(
573
)
$
(
206,990
)
$
239,660
Exercise of stock options
226,695
—
1,104
—
—
1,104
Issuance of common stock in at-the-market offering
1,409,443
1
19,426
—
—
19,427
Stock-based compensation
—
—
4,858
—
—
4,858
Net loss
—
—
—
—
(
18,697
)
(
18,697
)
Unrealized loss on marketable securities
—
—
—
(
934
)
—
(
934
)
Balance at September 30, 2026
39,249,547
$
39
$
472,573
$
(
1,507
)
$
(
225,687
)
$
245,418
Class A and Class B
Common Stock
Additional
Paid-in
Capital
Accumulated Other
Comprehensive
Income
Accumulated
Deficit
Total
Stockholders'
Equity
Shares
Amount
Balance at December 31, 2024
25,854,549
$
26
$
315,371
$
71
$
(
117,402
)
$
198,066
Exercise of stock options
17,000
—
24
—
—
24
Stock-based compensation
—
—
2,569
—
—
2,569
Net loss
—
—
—
—
(
15,990
)
(
15,990
)
Unrealized gain on marketable securities
—
—
—
99
—
99
Balance at March 31, 2025
25,871,549
$
26
$
317,964
$
170
$
(
133,392
)
$
184,768
Shares purchased through employee stock purchase plan
48,346
—
267
—
—
267
Stock-based compensation
—
—
2,418
—
—
2,418
Net loss
—
—
—
—
(
16,040
)
(
16,040
)
Unrealized loss on marketable securities
—
—
—
(
23
)
—
(
23
)
Balance at June 30, 2025
25,919,895
$
26
$
320,649
$
147
$
(
149,432
)
$
171,390
Issuance of common stock in at-the-market offering, net of issuance costs
3,241,110
3
19,009
—
—
19,012
Exercise of stock options
21,506
—
173
—
—
173
Stock-based compensation
—
—
2,569
—
—
2,569
Net loss
—
—
—
—
(
12,792
)
(
12,792
)
Unrealized loss on marketable securities
—
—
—
118
—
118
Balance at September 30, 2025
29,182,511
$
29
$
342,400
$
265
$
(
162,224
)
$
180,470
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
Table of Contents
CONTINEUM THERAPEUTICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended September 30,
2026
2025
Operating activities
Net loss
$
(
48,307
)
$
(
44,822
)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization
298
238
Noncash operating lease expense
1,543
693
Stock-based compensation
12,521
7,556
Accretion of premiums/discounts on marketable securities, net
(
579
)
(
688
)
Loss on disposal of property and equipment
2
67
Gain on marketable securities
—
(
6
)
Changes in operating assets and liabilities
Prepaid expenses and other current assets
(
233
)
(
892
)
Other long-term assets
—
(
6
)
Accounts payable
(
364
)
(
1,031
)
Accrued expenses
(
1,724
)
(
2,613
)
Operating lease liabilities
(
1,984
)
(
766
)
Net cash used in operating activities
(
38,827
)
(
42,270
)
Investing activities
Purchase of property and equipment
(
318
)
(
189
)
Purchases of marketable securities
(
158,946
)
(
77,769
)
Sales and maturities of marketable securities
175,763
121,698
Net cash provided by investing activities
16,499
43,740
Financing activities
Payments of deferred offering costs
(
58
)
(
256
)
Proceeds from issuance of common stock in at-the-market offering, net of offering costs
19,427
19,012
Proceeds from exercise of stock options
1,775
197
Proceeds from employee stock purchase plan
779
267
Net cash provided by financing activities
21,923
19,220
Net increase (decrease) in cash and cash equivalents
(
405
)
20,690
Cash and cash equivalents at beginning of period
75,603
21,943
Cash and cash equivalents at end of period
$
75,198
$
42,633
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
Table of Contents
CONTINEUM THERAPEUTICS, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1.
Organization and Basis of Presentation
Organization and Nature of Operations
Contineum Therapeutics, Inc. (the “Company”), is a clinical-stage biopharmaceutical company pioneering structurally differentiated small molecule therapies for inflammatory and fibrotic diseases with significant unmet need. The Company was incorporated in the state of Delaware in 2009, and in November 2023 changed its name from Pipeline Therapeutics, Inc. to Contineum Therapeutics, Inc.
Liquidity and Capital Resources
Since its inception, the Company has devoted substantially all its resources to research and development activities, business planning, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital to support and expand such activities and providing general and administrative support for these operations. The Company incurred a net loss of $
18.7
million and $
48.3
million for the three and nine months ended September 30, 2026, respectively. The Company had an accumulated deficit of $
225.7
million as of September 30, 2026. From its inception through September 30, 2026, the Company has financed its operations primarily from the sale of equity securities and convertible equity securities, and a global license and development agreement (the “J&J License Agreement”) the Company entered in February 2023 with Janssen Pharmaceutica NV, a Johnson & Johnson company.
In May 2025, the Company entered into a Sales Agreement with Leerink Partners LLC (the “ATM Sales Agreement”) relating to the offer and sale of up to $
75.0
million in shares of its Class A common stock, par value $
0.001
per share (“Class A common stock”) in an “at-the-market” offering program (the “ATM Program”). In March 2026, the Company entered into Amendment No. 1 to the ATM Sales Agreement (the “ATM Amendment”) with Leerink Partners to increase the aggregate offering price of the shares of its Class A common stock that the Company may sell pursuant to the ATM Sales Agreement, as amended (the “Amended ATM Sales Agreement”). In connection with the ATM Amendment, the Company filed a prospectus supplement (the “ATM Prospectus Supplement”) for the offer and sale of up to $
100.0
million in shares of its Class A common stock under the Amended ATM Sales Agreement, exclusive of amounts previously sold under the ATM Sales Agreement. During the three months ended September 30, 2026, the Company sold
1,409,443
shares of its Class A common stock pursuant to the Amended ATM Sales Agreement. The shares of Class A common stock were sold at a weighted average price of $
14.19
per share, resulting in gross proceeds of $
20.0
million. The Company received net proceeds of $
19.4
million after deducting sales agent commissions and offering costs of $
0.6
million.
In December 2025, the Company completed a follow-on public offering in which
8,097,570
shares of its Class A common stock were sold at a public offering price of $
12.25
per share resulting in aggregate net proceeds of $
93.0
million.
As of September 30, 2026, the Company had cash, cash equivalents and marketable securities of $
244.5
million. Management believes the Company's existing cash, cash equivalents and marketable securities will be sufficient to support its operations for at least 12 months from the issuance date of these unaudited condensed financial statements.
As the Company continues to pursue its business plan, it expects to finance its operations through both public and private sales of equity, debt financings or other commercial arrangements, which could include income from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. However, there can be no assurance that any additional financing or strategic transactions will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it may need to delay, reduce or eliminate its product development or future commercialization efforts, which could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. Further, if the Company raises funds through licensing or other similar arrangements with third parties, it may be required to relinquish valuable rights to its technology, future revenue streams, research programs or drug candidates or may be required to grant licenses on terms that may not be favorable to it and/or may reduce the value of its common stock.
Unaudited Interim Condensed Financial Statements
The condensed balance sheet as of September 30, 2026, condensed statements of operations and comprehensive loss and condensed statements of stockholders’ equity for the three and nine months ended September 30, 2026 and 2025, and condensed statements of cash flows for the nine months ended September 30, 2026 and 2025, and related notes to
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condensed financial statements are unaudited. These unaudited interim condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s financial position, results of operations and cash flows for the periods presented. The condensed results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period. The condensed balance sheet as of December 31, 2025 included herein was derived from the audited financial statements as of that date. These interim unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 5, 2026.
2.
Summary of Significant Accounting Policies
During the nine months ended September 30, 2026, there were no significant changes to the Company's significant accounting policies as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 5, 2026.
Basis of Presentation
The Company has prepared the accompanying condensed financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. The financial statements are presented in U.S. dollars. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”).
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements and accompanying notes. Accounting estimates and management judgments reflected in the financial statements include: the accrual of research and development expenses; the incremental borrowing rate used to recognize the right-of-use assets and lease liabilities; the fair value of common stock; and stock-based compensation. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may materially differ from these estimates and assumptions.
Recently Issued Accounting Pronouncements
Not
Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03,
Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
(“ASU 2024-03”). This standard requires a public entity to disaggregate certain income statement expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its financial statements.
In December 2025, the FASB issued ASU No. 2025-11,
Interim Reporting (Topic 270): Narrow-Scope Improvements
(“ASU 2025-11”). This standard clarifies the applicability of interim reporting guidance under U.S. GAAP, provides a comprehensive list of interim disclosure requirements within Topic 270, and introduces a disclosure principle requiring entities to provide information about events and changes occurring after the end of the most recent annual reporting period that have a material impact on the entity. The ASU does not change the fundamental nature of interim reporting or expand or reduce existing interim disclosure requirements. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 for public business entities, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its interim financial reporting and related disclosures.
In December 2025, the FASB issued ASU No. 2025-12,
Codification Improvements
(“ASU 2025-12”). This standard addresses suggestions received from stakeholders regarding the ASC and makes other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. ASU 2025-12 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual periods, with early adoption
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permitted. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its financial statements and related disclosures.
3.
Cash Equivalents and Marketable Securities
The following table summarizes the amortized cost and fair value of the Company’s cash equivalents and marketable securities by major investment category (in thousands):
September 30, 2026
Unrealized
Maturity in Years
Amortized Cost
Gains
Losses
Fair Value
Cash equivalents
Less than
1
$
74,720
$
—
$
(
51
)
$
74,669
U.S. Government agency securities
3
years or less
39,479
—
(
404
)
39,075
Certificate of deposit
Less than
1
1,165
—
(
1
)
1,164
Corporate debt securities
3
years or less
111,899
2
(
1,030
)
110,871
Commercial paper
Less than
1
11,287
—
(
18
)
11,269
Yankee debt
Less than
1
2,573
—
(
4
)
2,569
Asset-backed securities
2
years or less
4,339
2
(
3
)
4,338
Total
$
245,462
$
4
$
(
1,511
)
$
243,955
December 31, 2025
Unrealized
Maturity in Years
Amortized Cost
Gains
Losses
Fair Value
Cash equivalents
Less than
1
$
75,051
$
—
$
—
$
75,051
U.S. Government agency securities
2
years or less
41,238
136
(
1
)
41,373
Certificate of deposit
Less than
1
3,009
4
—
3,013
Corporate debt securities
2
years or less
81,614
84
—
81,698
Commercial paper
Less than
1
48,448
7
(
2
)
48,453
Yankee debt
Less than
1
4,463
2
—
4,465
Asset-backed securities
3
years or less
8,261
30
—
8,291
Total
$
262,084
$
263
$
(
3
)
$
262,344
The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, current and expected future economic conditions. The Company has no requirement or intention to sell these securities before maturity or recovery of their amortized cost basis. As of September 30, 2026 and December 31, 2025, the Company did not record an allowance for credit loss related to its investment portfolio. As of September 30, 2026,
152
out of
179
of the Company’s cash equivalents and available-for-sale debt securities were in an aggregate gross unrealized loss position. The unrealized losses were broadly distributed across the portfolio and not concentrated in any one security. As of December 31, 2025,
7
out of
225
of the Company’s cash equivalents and available-for-sale debt securities were in an aggregate gross unrealized loss position. As of September 30, 2026 and December 31, 2025, all of the Company’s available-for-sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded had been in a continuous unrealized loss position for less than 12 months. Based on the Company’s review of these securities as of September 30, 2026, the Company believes that all unrealized loss positions were not other-than-temporary in nature.
The following tables summarize the Company’s cash equivalents and available-for-sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by major security type (in thousands):
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September 30, 2026
Fair Value
Unrealized Losses
Cash equivalents
$
64,293
$
(
51
)
U.S. Government agency securities
36,786
(
404
)
Certificate of deposit
1,164
(
1
)
Corporate debt securities
107,908
(
1,030
)
Commercial paper
10,045
(
18
)
Yankee debt
2,569
(
4
)
Asset-backed securities
1,750
(
3
)
Total
$
224,515
$
(
1,511
)
December 31, 2025
Fair Value
Unrealized Losses
U.S. Government agency securities
$
1,771
$
(
1
)
Commercial paper
25,104
(
2
)
Total
$
26,875
$
(
3
)
4.
Fair Value Measurements
The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1
—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2
—Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3
—Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).
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Assets and liabilities measured at fair value on a recurring basis are as follows (in thousands):
Fair Value Measurements Using
Total
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
September 30, 2026:
Assets:
Cash equivalents
(1)
$
74,669
$
74,669
$
—
$
—
U.S. Government agency securities
39,075
39,075
—
—
Certificates of deposits
1,164
—
1,164
—
Corporate debt securities
110,871
—
110,871
—
Commercial paper
11,269
—
11,269
—
Yankee debt
2,569
—
2,569
—
Asset-backed securities
4,338
—
4,338
—
Total financial assets
$
243,955
$
113,744
$
130,211
$
—
December 31, 2025:
Assets:
Cash equivalents
$
75,051
$
75,051
$
—
$
—
U.S. Government agency securities
41,373
41,373
—
—
Certificates of deposits
3,013
—
3,013
—
Corporate debt securities
81,698
—
81,698
—
Commercial paper
48,453
—
48,453
—
Yankee debt
4,465
—
4,465
—
Asset-backed securities
8,291
—
8,291
—
Total financial assets
$
262,344
$
116,424
$
145,920
$
—
(1) Cash equivalents includes $
74.4
million in short-term investments and $
0.3
million in other cash equivalents.
The carrying amounts of the Company’s financial instruments, including cash, cash equivalents, prepaid and other current assets, accounts payable, and accrued liabilities, approximate fair value due to their short maturities. Included in cash and cash equivalents at September 30, 2026 and December 31, 2025 are money market funds with a carrying value and fair value of $
10.0
million and $
6.5
million, respectively, based upon a Level 1 fair value assessment.
5.
Accrued Expenses
Accrued expenses consisted of the following (in thousands):
September 30, 2026
December 31, 2025
Accrued compensation expenses
$
3,488
$
4,796
Accrued research and development expenses
873
1,195
Accrued professional and consulting expenses
142
342
Other accrued expenses
160
54
Total accrued expenses
$
4,663
$
6,387
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6.
Stockholders
’
Equity
Common Stock
The Company has two classes of common stock: Class A common stock and Class B common stock. Class A common stock has
one
vote per share and Class B common stock has
no
votes per share.
The following table summarizes the changes in Class A common stock and Class B common stock for the nine months ended September 30, 2026 (in shares):
Common Stock
Class A
Class B
Balance at December 31, 2025
31,236,787
6,083,338
Exercise of stock options
66,252
—
Conversion of Class B common stock into Class A common stock
1,420,838
(
1,420,838
)
Balance at March 31, 2026
32,723,877
4,662,500
Exercise of stock options
106,275
—
Shares purchased through employee stock purchase plan
120,757
—
Balance at June 30, 2026
32,950,909
4,662,500
Exercise of stock options
226,695
—
Conversion of Class B common stock into Class A common stock
750,000
(
750,000
)
Issuance of common stock in at-the-market offering
1,409,443
—
Balance at September 30, 2026
35,337,047
3,912,500
The following table summarizes the changes in Class A common stock and Class B common stock for the nine months ended September 30, 2025 (in shares):
Common Stock
Class A
Class B
Balance at December 31, 2024
19,125,377
6,729,172
Exercise of stock options
17,000
—
Balance at March 31, 2025
19,142,377
6,729,172
Shares purchased through employee stock purchase plan
48,346
—
Balance at June 30, 2025
19,190,723
6,729,172
Issuance of common stock in at-the-market offering
3,241,110
—
Conversion of Class B common stock into Class A common stock
312,500
(
312,500
)
Exercise of stock options
21,506
—
Balance at September 30, 2025
22,765,839
6,416,672
Class A common stock reserved for future issuance consisted of the following:
September 30, 2026
December 31, 2025
Common stock options granted and outstanding
7,272,827
5,548,320
Shares available for issuance under the 2024 Equity Incentive Plan
2,199,840
1,707,563
Common stock warrant
15,764
15,764
Common stock reserved under the 2024 Employee Stock Purchase Plan
595,549
436,306
Shares available for issuance under the 2026 Employment Inducement Equity Incentive Plan
472,000
—
Convertible Class B common stock
3,912,500
6,083,338
Total common stock reserved for future issuance
14,468,480
13,791,291
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There are
no
shares of Class B common stock reserved for future issuance as of September 30, 2026 and December 31, 2025.
Equity Incentive Plans
As of September 30, 2026, there were
2,199,840
shares of the Company’s Class A common stock available for issuance under the 2024 Equity Incentive Plan (the “2024 Plan”).
In January 2026, the Company’s board of directors adopted and approved the 2026 Employment Inducement Equity Incentive Plan (the “2026 Inducement Plan”). The terms of the 2026 Inducement Plan are substantially similar to the terms of the Company’s 2024 Plan with the exception that incentive stock options may not be issued under the Inducement Plan and awards under the Inducement Plan may only be issued to eligible recipients under the applicable Nasdaq rules. The 2026 Inducement Plan was adopted by the board of directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. Under the 2026 Inducement Plan, the Company may grant non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights, and other stock or cash-based awards to an employee in connection with his or her commencement of employment with the Company. The number of shares initially reserved for issuance under the 2026 Inducement Plan was
750,000
. Options granted were pursuant to Nasdaq Listing Rule 5635(c)(4) and are subject to service-based vesting conditions. As of September 30, 2026, there were
472,000
shares of the Company’s Class A common stock available for issuance under the 2026 Inducement Plan.
Stock Options
Stock option activity is as follows:
Options Outstanding
Weighted- Average Exercise
Price
Weighted- Average Remaining
Contractual Term
Aggregate Intrinsic Value (in
thousands)
Balance at December 31, 2025
5,548,320
$
9.46
7.28
$
18,235
Options granted
2,399,357
14.17
—
—
Options exercised
(
399,222
)
4.45
—
—
Options cancelled and forfeited
(
271,428
)
11.69
—
—
Options expired
(
4,200
)
15.09
—
—
Balance at September 30, 2026
7,272,827
$
11.20
7.32
$
22,010
Options vested and expected to vest as of September 30, 2026
7,272,827
$
11.20
7.32
$
22,010
Options exercisable as of September 30, 2026
3,967,646
$
9.46
6.05
$
18,556
The aggregate intrinsic value of options exercised during the nine months ended September 30, 2026 and 2025 was $
4.3
million and $
0.3
million, respectively, determined as of the date of exercise.
The Company estimated the fair value of stock options using the Black-Scholes valuation model. The Company accounts for any forfeitures of options when they occur. Previously recognized compensation expense for an award is reversed in the period that the award is forfeited.
The fair value of stock options expected to vest was estimated using the following weighted-average assumptions:
Three Months Ended September 30,
Nine Months Ended September 30,
2026
2025
2026
2025
Assumptions:
Expected term (in years)
6.08
6.08
6.00
5.96
Expected volatility
107
%
97
%
110
%
94
%
Risk free interest rate
4.54
%
3.89
%
3.95
%
4.25
%
Dividend yield
—
—
—
—
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The weighted-average grant-date fair value per share of stock options granted and expected to vest as of their grant date during the three months ended September 30, 2026 and 2025 was $
12.79
and $
4.84
per share, respectively. The weighted-average grant-date fair value per share of stock options granted and expected to vest as of their grant date during the nine months ended September 30, 2026 and 2025 was $
11.92
and $
6.33
per share, respectively.
Stock-Based Compensation
Stock-based compensation has been reported in the condensed statements of operations and comprehensive loss as follows (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2026
2025
2026
2025
Research and development
$
2,557
$
1,176
$
6,069
$
3,353
General and administrative
2,301
1,393
6,452
4,203
Total
$
4,858
$
2,569
$
12,521
$
7,556
As of September 30, 2026, there was approximately $
34.8
million of total unrecognized stock-based compensation related to stock-based compensation arrangements, which is expected to be recognized over a weighted-average period of approximately
2.6
years.
Employee Stock Purchase Plan
As of September 30, 2026, there were
595,549
shares of the Company’s Class A common stock reserved and available for issuance under the 2024 Employee Stock Purchase Plan (“2024 ESPP”). During the nine months ended September 30, 2026, there were
120,757
shares purchased under the 2024 ESPP and the recorded expense was $
0.5
million. During the nine months ended September 30, 2025, there were
48,346
shares purchased under the 2024 ESPP and the recorded expense was $
0.1
million.
7.
License Agreement
In February 2023, the Company entered into the J&J License Agreement, pursuant to which the Company granted J&J an exclusive, worldwide license to develop, manufacture and commercialize PIPE-307 in all indications. Upon J&J deciding to conduct a first Phase 3 clinical trial for a product using PIPE-307, the J&J License Agreement allows the Company the option to co-fund a portion of all Phase 3 and subsequent development costs for PIPE-307, with such costs capped annually. If the Company opts to fund such development costs, then the royalties the Company is eligible to receive will increase by
one
to
two
percentage points. Pursuant to the terms of the J&J License Agreement, the Company received an upfront, non-refundable and non-creditable payment of $
50.0
million upon transferring the license and know-how, existing inventory and manufacturing technology. The Company is also eligible to receive approximately $
1.0
billion in non-refundable, non-creditable milestone payments. Additionally, the Company is eligible to receive tiered royalties in the low-double digit to high-teen percent range on net sales of products containing PIPE-307.
All variable consideration remained fully constrained as of September 30, 2026.
There was no revenue recognized for the three and nine months ended September 30, 2026 and 2025. The Company does not have any products approved for sale and has not yet generated any revenue from product sales.
8.
Commitments and Contingencies
Operating Lease
In October 2023, the Company executed a noncancelable operating lease for new premises to be used for office, research and development and laboratory purposes (“General Atomics Court Lease”). The General Atomics Court Lease has a
five-year
term with an option to extend for another
three-year
period subject to certain conditions, which the Company is not reasonably certain to exercise and therefore was not considered in determining the right-of-use (“ROU”) assets and lease liabilities balance.
In August 2025, the Company signed an amendment to the General Atomics Court Lease for additional space (“General Atomics Court Lease Expansion”). The General Atomics Court Lease Expansion commenced for accounting
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purposes in October 2025. The General Atomics Court Lease Expansion expires in December 2027 with an option to extend through October 2029, which the Company is not reasonably certain to exercise and therefore was not considered in determining the ROU assets and lease liabilities balance. Upon commencement of the General Atomics Court Lease Expansion, the Company recorded an additional ROU asset and lease liability of approximately $
1.4
million.
In November 2025, the Company leased certain equipment used in connection with its on-going Phase 2 clinical trial of PIPE-791 for the treatment of idiopathic pulmonary fibrosis. The leases are accounted for as operating leases and have lease terms expiring in 2028. The Company recorded an ROU asset and lease liability of approximately $
1.9
million.
Below is a summary of the Company’s operating lease right-of-use assets and lease liabilities as of September 30, 2026 and December 31, 2025 (in thousands, except for years and %):
September 30, 2026
December 31, 2025
Operating lease right-of-use assets
$
6,096
$
7,639
Operating lease liability obligations, current
$
2,724
$
2,341
Operating lease liability obligations, less current portion
3,542
5,909
Total lease liability obligations
$
6,266
$
8,250
Weighted-average remaining lease term
3.1
3.4
Weighted-average discount rate
8.9
%
8.9
%
During the three months ended September 30, 2026 and 2025, the Company recognized $
0.7
million and $
0.4
million, respectively, in operating lease expenses, which are included in operating expenses in the Company’s statements of operations and comprehensive loss. During the nine months ended September 30, 2026 and 2025, the Company recognized $
1.8
million and $
1.2
million, respectively, in operating lease expenses, which are included in operating expenses in the Company’s statements of operations and comprehensive loss.
Supplemental cash flow information related to operating leases are as follows (in thousands):
Nine Months Ended September 30,
2026
2025
Cash paid for amounts included in the measurement of lease liabilities
$
2,609
$
1,134
Future minimum lease payments for the Company’s operating lease liabilities as of September 30, 2026 were as follows (in thousands):
2026
$
793
2027
2,518
2028
2,000
2029
1,556
Total minimum lease payments
6,867
Less: Amount representing interest
601
Total lease liability obligations
6,266
Less: Current portion of operating lease liabilities
2,724
Operating lease liabilities, net of current portion
$
3,542
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Litigation
From time to time, the Company may become involved in various legal proceedings and claims that arise in the ordinary course of the Company’s business activities. As of September 30, 2026, the Company was not a party to any material legal proceedings.
Other Commitments
The Company has various manufacturing, clinical, research and other contracts with vendors in the conduct of the normal course of its business. Such contracts are generally terminable with advanced written notice and payment for any products or services received by the Company through the effective time of termination and any non-cancelable and non-refundable obligations incurred by the vendor at the effective time of the termination. In the case of terminating a clinical trial agreement at a particular site, the Company would also be obligated to provide continued support for appropriate medical procedures at that site until completion or termination.
9.
Net Loss Per Share
For the three and nine months ended September 30, 2026 and 2025, net loss is attributable equally to each share of Class A common stock and Class B common stock and is determined based on the weighted-average number of the respective class of common stock outstanding. Weighted-average common shares include shares of the Company’s Class A common stock and Class B common stock. The basic and diluted net loss per share amounts are the same for Class A common stock and Class B common stock.
The Company’s potentially dilutive securities, which include common stock options and a common stock warrant have been excluded from the computation of diluted net loss per share for the three and nine months ended September 30, 2026 and 2025, as the effect would reduce the net loss per share. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.
The following potentially dilutive securities have been excluded from the diluted per share calculation for the periods presented as they would be anti-dilutive:
September 30, 2026
September 30, 2025
Common stock options
7,272,827
5,597,573
Common stock warrant
15,764
15,764
Total potentially dilutive securities
7,288,591
5,613,337
10.
Segment Reporting
The Company operates in
one
reportable segment, pioneering structurally differentiated small molecule therapies for inflammatory and fibrotic diseases with significant unmet need.
The Company’s chief operating decision maker (“CODM”) is its President and Chief Executive Officer, Carmine Stengone. The CODM makes decisions on resource allocation, assesses performance of the business, and monitors budget versus actual results of the Company as a whole using operating expenses, as reported on the Company’s statements of operations and comprehensive loss. Net loss is also a measure that is considered in monitoring budget versus actual results. The CODM does not review assets in evaluating the results of the Company, and therefore, such information is not presented.
Significant segment expenses within net loss include research and development related to PIPE-791, PIPE-307, CTX-343, discovery programs and unallocated internal costs, general and administrative and interest income.
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The following table provides the operating financial results of the Company’s single reportable segment (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2026
2025
2026
2025
Significant segment expenses
Research and development
PIPE-791
$
9,113
$
4,465
$
22,291
$
16,197
PIPE-307
34
1,526
26
6,301
CTX-343
286
512
900
2,949
Discovery programs
999
1,263
3,742
3,973
Unallocated internal costs
(1)
5,553
3,226
13,375
9,347
General and administrative
4,981
3,940
14,964
12,177
Total operating expenses
20,966
14,932
55,298
50,944
Loss from operations
(
20,966
)
(
14,932
)
(
55,298
)
(
50,944
)
Interest income
2,362
1,957
7,207
6,236
Other segment items
(2)
(
93
)
183
(
216
)
(
114
)
Net loss
$
(
18,697
)
$
(
12,792
)
$
(
48,307
)
$
(
44,822
)
______________________
(1)
Unallocated internal research and development costs include employee-related expenses that cannot be directly attributable to a specific research project, stock-based compensation for employees engaged in research and development functions, facilities, depreciation and other related expenses.
(2)
Other segment items include other expense, net which consists of non-operating items.
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Item 2. Management
’
s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited financial statements and related notes thereto as of and for the year ended December 31, 2025
and the related Management
’
s Discussion and Analysis of Financial Condition and Results of Operations, both of which are included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 5, 2026.
This Quarterly Report on Form
10-Q may contain
“
forward-looking statements
”
within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended (the
“
Exchange Act
”
). Such forward-looking statements, which represent our intent, belief, or current expectations, involve risks and uncertainties. We use words such as
“
may,
” “
will,
” “
expect,
” “
anticipate,
” “
estimate,
” “
intend,
” “
plan,
” “
predict,
” “
potential,
” “
believe,
” “
should
”
and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements may include, but are not limited to, statements concerning projections about our accounting and finances, our clinical trial and product development plans and timelines, the indications, anticipated benefits of, and market opportunities for our drug candidates, our operating runway, our business strategies and plans, and other statements regarding future performance.
Although we believe the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risk and we can give no assurances that our expectations will prove to be correct. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form
10-Q. As a result of many factors, including without limitation those set forth under
“
Risk Factors
”
under Item
1A of Part
II below, and elsewhere in this Quarterly Report on Form
10-Q, our actual results may differ materially from those anticipated in these forward-looking statements. Except as required by law, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes.
Overview
We are a clinical-stage biopharmaceutical company pioneering structurally differentiated small molecule therapies for inflammatory and fibrotic diseases with significant unmet need. We target biological pathways associated with specific clinical impairments that we believe, once modulated, will demonstrably alter the course of disease.
We focus on developing selective compounds targeting challenging molecular pathways and have built a portfolio of small molecule drug candidates.
Our wholly-owned lead asset, PIPE-791, is a novel, brain penetrant, small molecule inhibitor of the lysophosphatidic acid receptor 1 (“LPAR1”) in development for idiopathic pulmonary fibrosis (“IPF”) and chronic pain. LPAR1 antagonism is a clinically validated mechanism in IPF, and we believe that our preclinical studies, Phase 1 healthy volunteer data, and Phase 1 positron emission tomography (“PET”) data support the development of PIPE-791 for IPF, chronic pain and other fibrotic diseases. Specifically, based on its high bioavailability, high selectivity, low plasma protein binding, and long receptor residence time, we believe PIPE-791 has the potential to be a differentiated LPAR1 therapy with broad therapeutic potential (portfolio in a pill). In September 2025, we reported positive top-line data from our completed Phase 1b PET trial, which measured the relationship of pharmacokinetics to receptor occupancy (“RO”) by PET imaging. The data from the Phase 1b PET trial further affirmed the planned dose selection for our Phase 2 trial of PIPE-791 in IPF. The Company initiated patient dosing in PROPEL-IPF, a global Phase 2 clinical trial evaluating PIPE-791 for the treatment of patients with IPF, in the first quarter of 2026. PROPEL-IPF is a randomized, double-blind, placebo-controlled clinical trial evaluating the efficacy, safety, tolerability and pharmacokinetics of once-daily, oral PIPE-791 with 26 weeks of treatment in approximately 324 IPF patients. The primary efficacy endpoint is the change from baseline through week 26 in absolute forced vital capacity (FVC mL). Based on enrollment to date at our clinical sites, we believe we remain on track to complete the PROPEL-IPF clinical trial in June 2028. As of October 21, 2026, we have received regulatory authorization to conduct the trial in 25 countries and have opened more than 100 clinical sites. We have engaged in pre-IND discussions with the FDA regarding the PROPEL-IPF trial. During these discussions, the FDA expressed concerns about LPAR1 antagonists and the potential for adverse effects related to blood pressure. The FDA indicated its concerns were informed by data from other programs and recommended we collect additional clinical data to further analyze whether similar risks exist with respect to PIPE-791. To date, we have not identified any clinically relevant adverse safety signals related to PIPE-791 in our completed clinical trials, including with respect to blood pressure. As our development program advances, we intend to collect much of the safety data the FDA recommended we collect through our ongoing PROPEL-IPF trial and other planned clinical trials and studies. In April 2026, we announced positive topline data from a Phase 1b, randomized, double-blind, placebo-controlled, crossover study which was designed to explore the safety and efficacy of oral PIPE-791 in subjects with chronic osteoarthritic pain or chronic low back pain. The Phase 1b trial achieved its primary endpoint demonstrating favorable safety and tolerability with no clinically-relevant orthostatic events. We also observed
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encouraging trends across multiple exploratory efficacy endpoints including improvements in measures of pain, and other functional patient-reported outcomes. We believe these results support further evaluation of PIPE-791 in chronic pain.
Our partnered novel drug candidate, PIPE-307, is a selective, small-molecule inhibitor of the muscarinic type 1 receptor (“M1R”), in development for depression. J&J completed enrollment of 105 adult participants for its Phase 2 Moonlight-1 trial of PIPE-307, renamed by J&J to JNJ-89495120, in June 2026. This trial was a randomized, double-blind, multicenter, placebo-controlled, proof-of-concept study to evaluate the efficacy, safety, and tolerability of PIPE-307/JNJ-89495120 as a monotherapy in adult participants with major depressive disorder (“MDD”). In September 2026, we announced that the MOONLIGHT-1 trial did not achieve its primary efficacy endpoint. JNJ-89495120/PIPE-307 was well-tolerated with no new safety signals. J&J continues to evaluate the trial data, including data related to prespecified exploratory endpoints, and assess the totality and clinical relevance of the findings to inform next steps for JNJ-5120/PIPE-307.
We have a portfolio of novel and proprietary small molecule programs that we believe can modulate innate pathways to restore function in inflammatory and fibrotic diseases. We retain worldwide rights to our LPAR1 programs and discovery portfolio, and we have partnered with J&J for the development and potential commercialization efforts of PIPE-307.
(1)
We made a strategic decision to defer further clinical development for our CTX-343 program until funding is obtained to specifically move this program forward.
(2)
J&J has sole discretion whether or not to further develop PIPE-307 for MDD or any other indication.
We are also actively conducting preclinical and discovery-phase experiments targeting various indications where our internally-discovered molecules may have therapeutic potential.
We expect our operating expenses to significantly increase as we continue to develop, conduct clinical trials, and seek regulatory approvals for our drug candidates, engage in other research and development activities to expand the indications for our existing drug candidates and develop a pipeline of additional drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio, and, if we obtain approval for one or more of our drug candidates, launch commercial activities. We also expect to incur additional operating expenses as we continue operating as a public company. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing and scope of our clinical trials and our expenditures on other research and development activities.
As we continue to pursue our business plan, we expect to finance our operations through both public and private sales of equity, debt financings or other commercial arrangements, which could include income from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. However, there can be no assurance that any additional financing or strategic transactions will be available to us on acceptable terms, if at all. If events or circumstances occur such that we do not obtain additional funding, we may need to delay, reduce or eliminate our product development or future commercialization efforts, which could have a material adverse effect on our business, results of operations or financial condition. Further, if we raise funds through licensing or other commercial arrangements with third parties, we may be required to relinquish valuable rights to our technology, future revenue streams, research programs or drug candidates or may be required to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.
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Collaboration
In February 2023, we entered into a license agreement with J&J (the “J&J License Agreement”), pursuant to which we granted J&J an exclusive, worldwide license to develop, manufacture and commercialize PIPE-307 in all indications.
J&J is generally responsible for all development, manufacturing and commercialization activities for PIPE-307. Upon J&J conducting a first Phase 3 clinical trial for a product using PIPE-307, we have an opt-in right to fund a portion of all Phase 3 and subsequent development costs for PIPE-307. If we opt to fund such development costs, then the royalties we are eligible to receive will increase by one to two percentage points.
J&J completed enrollment of 105 adult participants for its Phase 2 Moonlight-1 trial of PIPE-307, renamed by J&J to JNJ-89495120, in June 2026. This trial was a randomized, double-blind, multicenter, placebo-controlled, proof-of-concept study to evaluate the efficacy, safety, and tolerability of PIPE-307/JNJ-89495120 as a monotherapy in adult participants with MDD. In September 2026, we announced that the MOONLIGHT-1 trial did not achieve its primary efficacy endpoint. JNJ-89495120/PIPE-307 was well-tolerated with no new safety signals. J&J continues to evaluate the trial data, including data related to prespecified exploratory endpoints, and assess the totality and clinical relevance of the findings to inform next steps for JNJ-5120/PIPE-307.
The J&J License Agreement expires on a licensed product-by-product and country-by-country basis upon the last to occur of: (i) the expiration of the last-to-expire licensed patent claim covering the composition of matter of the licensed compound in such licensed product in such country; (ii) the expiration of exclusive marketing rights conferred by a regulatory authority or applicable law (other than patent exclusivity) for such licensed product in such country; or (iii) ten years after the first commercial sale of such licensed product in such country. Either party may terminate the J&J License Agreement in the event of an uncured material breach by the other party or a bankruptcy or insolvency of the other party. J&J may terminate the J&J License Agreement without cause upon prior written notice to us. Upon any termination, all license rights granted to J&J terminate.
Financial Operations Overview
Revenue
We recognize license revenues as identified performance obligations are satisfied or other events occur, specifically related to our J&J License Agreement. Pursuant to the terms of the J&J License Agreement, we received an upfront payment of $50.0 million in May 2023. We are also eligible to receive approximately $1.0 billion in non-refundable, non-creditable milestone payments, pursuant to the terms of the J&J License Agreement. Additionally, we are eligible to receive tiered royalties in the low-double digit to high-teen percent range on net sales of products containing PIPE-307. We determined that the initial transaction price under the J&J License Agreement equals $50.0 million, consisting solely of the upfront, non-refundable payment of $50.0 million received during the year ended December 31, 2023. There was no revenue recognized for the three and nine months ended September 30, 2026 and 2025. We do not have any products approved for sale and we have not yet generated any revenue from product sales.
Operating Expenses
Research and Development
Research and development expenses consist primarily of costs incurred for our internal research and development activities.
Direct costs include:
•
employee-related expenses, including salaries, related benefits, and travel that can be directly attributable to each research project;
•
expenses incurred in connection with research, laboratory consumables and preclinical studies;
•
expenses incurred in connection with conducting clinical trials, including investigator grants and site payments for time and pass-through expenses and expenses incurred under agreements with contract research organizations (“CROs”), other vendors or central laboratories and service providers engaged to conduct our trials;
•
the cost of consultants engaged in research and development related services;
18
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•
the cost to manufacture drug products for use in our preclinical studies and clinical trials; and
•
costs related to regulatory compliance.
Unallocated internal research and development costs include:
•
employee-related expenses, including salaries, related benefits, and travel that cannot be directly attributable to a specific research project;
•
stock-based compensation for employees engaged in research and development functions; and
•
facilities, depreciation and other related expenses.
We expense our research and development costs as they are incurred. We record advance payments for goods or services to be received in the future for use in research and development as prepaid expenses. We then expense the prepaid amounts as the related goods are delivered or the services are performed.
We track outsourced development costs, consultant costs and other external research and development costs such as third-party contract costs relating to manufacturing, clinical trial activities, translational medicine and toxicology activities to specific programs. We allocate employee related costs including salaries and related benefits based upon the level of effort for each specific project.
Certain employee activities that cannot be allocated to any one specific project or management related activities are considered indirect costs. The following tables summarize our research and development expenses for the three and nine months ended September 30, 2026 and 2025. The direct external development program expenses reflect external costs attributable to our clinical development and preclinical programs and personnel costs that can be directly attributed to a development program. The unallocated internal research and development costs include unallocated personnel costs, facility costs, stock-based compensation, laboratory consumables and discovery and research related activities.
Three Months Ended September 30,
Nine Months Ended September 30,
2026
2025
2026
2025
(in thousands)
(in thousands)
Direct external development program expense
PIPE-791
$
9,113
$
4,465
$
22,291
$
16,197
PIPE-307
34
1,526
26
6,301
CTX-343
286
512
900
2,949
Discovery programs
999
1,263
3,742
3,973
Unallocated internal research and development costs
Personnel related
1,797
831
3,799
2,666
Stock-based compensation
2,557
1,176
6,069
3,353
Facilities costs
723
490
1,956
1,476
Others
476
729
1,551
1,852
Total research and development costs
$
15,985
$
10,992
$
40,334
$
38,767
Research and development activities are central to our business model. There are numerous factors associated with the successful commercialization of any of our drug candidates, including future clinical trial design and various regulatory requirements, many of which we cannot determine with accuracy at this time based on our stage of development. In addition, future regulatory factors beyond our control may impact our clinical development programs. Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our drug candidates and our costs may increase if we exercise our opt-in right to fund a portion of all Phase 3 and subsequent development costs for PIPE-307 pursuant to the J&J License Agreement. However, we expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities in the near term and for the foreseeable future.
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The successful development of our drug candidates is highly uncertain. This is due to numerous risks and uncertainties, including the following:
•
successful completion of preclinical studies and clinical trials;
•
delays in regulators or institutional review boards authorizing us or our investigators to commence or continue our clinical trials;
•
our ability to negotiate agreements with clinical trial sites or CROs;
•
the number of clinical sites included in our clinical trials;
•
raising additional funds necessary to complete clinical development of our drug candidates;
•
obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our drug candidates;
•
establishing and qualifying manufacturing capabilities for clinical supplies of our drug candidates, whether directly or through qualified third party manufacturers;
•
our ability to receive necessary regulatory approvals from the U.S. Food and Drug Administration and comparable governmental bodies outside the United States;
•
our decision to elect to fund a portion of Phase 3 and subsequent development costs for PIPE-307;
•
coverage for our products by governmental and third party payors;
•
protecting and enforcing our rights in our intellectual property portfolio;
•
our ability to successfully compete with our competitors and their product offerings; and
•
maintaining a continued acceptable safety profile of the products following approval.
A change in the outcome of any of these variables with respect to the development of our drug candidates may significantly impact the costs and timing associated with the development of our drug candidates. We may never succeed in obtaining regulatory approval for any of our drug candidates or successfully commercialize our products, even if approved.
General and Administrative
General and administrative expenses consist primarily of salaries and employee-related costs, including stock-based compensation, for personnel in executive, finance and other administrative functions. Other significant costs include legal fees relating to intellectual property, patent applications, and corporate matters, professional fees for accounting and consulting services and facility-related costs.
We expect our general and administrative expenses will increase for the foreseeable future to support our increased research and development activities, the growth of our business operations and headcount and to reflect increased operating expenses as we continue operating as a public company. These increased costs will likely include increased expenses related to audit, legal, regulatory services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs.
Other Income
Interest Income
Interest income consists of interest earned on our cash, cash equivalents and marketable securities.
Results of Operations
Comparison of the Three Months Ended September 30, 2026 and 2025
The following table summarizes our results of operations for the three months ended September 30, 2026 and 2025 (in thousands):
20
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Three Months Ended September 30,
2026
2025
Change
Operating expenses:
Research and development
$
15,985
$
10,992
$
4,993
General and administrative
4,981
3,940
1,041
Total operating expenses
20,966
14,932
6,034
Loss from operations
(20,966)
(14,932)
(6,034)
Other income (expense):
Interest income
2,362
1,957
405
Other income (expense), net
(93)
183
(276)
Total other income, net
2,269
2,140
129
Net loss
$
(18,697)
$
(12,792)
$
(5,905)
Research and development expenses
. Research and development expenses were $16.0 million and $11.0 million for the three months ended September 30, 2026 and 2025, respectively. The increase of $5.0 million from period to period was due to the following:
•
$2.1 million increase in contract research organization costs due to a $4.8 million increase in costs related to the PROPEL-IPF Phase 2 trial for PIPE-791 for the treatment of IPF, partially offset by a $1.2 million decrease in costs related to the completed VISTA Phase 2 clinical trial for PIPE-307 for the treatment of relapse-remitting multiple sclerosis (“RRMS”), a $1.1 million decrease in costs related to the Phase 1b trial for PIPE-791 for the treatment of chronic pain, and a $0.4 million decrease in costs related to the completed Phase 1b PET trial for PIPE-791,
•
$1.5 million increase in noncash stock-based compensation,
•
$1.2 million increase in personnel-related expense related to an overall increase in personnel from period to period, and
•
$0.2 million increase in facilities costs.
General and administrative expenses
. General and administrative expenses were $5.0 million and $3.9 million for the three months ended September 30, 2026 and 2025, respectively. The increase of $1.1 million was due to a $0.9 million increase in noncash stock-based compensation, a $0.1 million increase in personnel-related expenses related to an overall increase in personnel from period to period, and a $0.1 million increase in legal costs.
Interest income
. Interest income was $2.4 million and $2.0 million for the three months ended September 30, 2026 and 2025, respectively. The increase of $0.4 million was due to an increase in funds invested in marketable securities during the three months ended September 30, 2026 compared to the three months ended September 30, 2025.
Comparison of the Nine Months Ended September 30, 2026 and 2025
The following table summarizes our results of operations for the nine months ended September 30, 2026 and 2025 (in thousands):
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Nine Months Ended September 30,
2026
2025
Change
Operating expenses:
Research and development
$
40,334
$
38,767
$
1,567
General and administrative
14,964
12,177
2,787
Total operating expenses
55,298
50,944
4,354
Loss from operations
(55,298)
(50,944)
(4,354)
Other income (expense):
Interest income
7,207
6,236
971
Other income (expense), net
(216)
(114)
(102)
Total other income, net
6,991
6,122
869
Net loss
$
(48,307)
$
(44,822)
$
(3,485)
Research and development expenses
. Research and development expenses were $40.3 million and $38.8 million for the nine months ended September 30, 2026 and 2025, respectively. The increase of $1.5 million from period to period was due to a $2.7 million increase in noncash stock-based compensation, $2.4 million increase in personnel-related expense related to an overall increase in personnel from period to period, $0.5 million increase in equipment costs, and a $0.4 million increase in facilities costs.
Partially offsetting these increases were the following:
•
$2.4 million decrease in contract research organization costs due to a $5.6 million decrease in costs related to the completed VISTA Phase 2 clinical trial for PIPE-307 for the treatment of RRMS, a $2.5 million decrease in costs related to the Phase 1b trial for PIPE-791 for the treatment of chronic pain, and a $2.2 million decrease in costs related to the completed Phase 1b PET trial for PIPE-791, partially offset by a $7.9 million increase in costs related to the PROPEL-IPF Phase 2 trial for PIPE-791 for the treatment of IPF, and
•
$2.1 million decrease in expenses for toxicology studies primarily for PIPE-791 and CTX-343.
General and administrative expenses
. General and administrative expenses were $15.0 million and $12.2 million for the nine months ended September 30, 2026 and 2025, respectively. The increase of $2.8 million was due to a $2.2 million increase in noncash stock-based compensation, $0.4 million increase in personnel-related expenses related to an overall increase in personnel from period to period, and a $0.2 million increase in consulting expenses.
Interest income
. Interest income was $7.2 million and $6.2 million for the nine months ended September 30, 2026 and 2025, respectively. The increase of $1.0 million was due to an increase in funds invested in marketable securities during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Liquidity and Capital Resources
Sources of Liquidity
We have incurred net losses and negative cash flows from operations in nearly every reporting period since our inception and anticipate that we will continue to incur net losses for the foreseeable future. We expect to incur substantial expenditures as we advance our drug candidates through clinical development, undergo the regulatory approval process, engage in other research and development activities to expand our pipeline of drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio and, if we obtain approval for one or more of our drug candidates, launch commercial activities.
Through September 30, 2026, we have funded our operations primarily from the sale of equity securities, convertible equity securities, and the J&J License Agreement. Through September 30, 2026, we have raised gross proceeds of approximately $451.6 million through equity issuances and an upfront payment from the J&J License Agreement of $50.0 million. As of September 30, 2026, we had an accumulated deficit of $225.7 million.
As of September 30, 2026, we had cash, cash equivalents and marketable securities of $244.5 million. Based on our current operating plan, we believe that our existing cash and cash equivalents and marketable securities, will be sufficient
22
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to meet our anticipated operating expenses and capital expenditure requirements through at least the next 12 months following the date of this Quarterly Report on Form 10-Q.
In May 2025, we entered into the ATM Sales Agreement relating to the offer and sale of up to $75.0 million in shares of our Class A common stock, par value $0.001 per share in the ATM Program. During the year ended December 31, 2025, we sold 3,241,110 shares of our Class A common stock pursuant to the ATM Sales Agreement generating net proceeds of $19.0 million. In March 2026, we entered into the ATM Amendment with Leerink Partners to increase the aggregate offering price of the shares of our Class A common stock that we may sell pursuant to the ATM Sales Agreement. In connection with the ATM Amendment, we filed the ATM Prospectus Supplement for the offer and sale of up to $100.0 million in shares of our Class A common stock under the Amended ATM Sales Agreement, exclusive of amounts previously sold under the ATM Sales Agreement. During the three months ended September 30, 2026, we sold 1,409,443 shares of our Class A common stock pursuant to the Amended ATM Sales Agreement. The shares of Class A common stock were sold at a weighted average price of $14.19 per share, resulting in gross proceeds of $20.0 million. We received net proceeds of $19.4 million after deducting sales agent commissions and offering costs of $0.6 million.
In December 2025, we completed a follow-on public offering in which 8,097,570 shares of our Class A common stock were sold at a public offering price of $12.25 per share resulting in aggregate net proceeds of $93.0 million.
As we continue to pursue our business plan, we expect to finance our operations through both public and private sales of equity, debt financings or other commercial arrangements, which could include milestone payments from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. However, there can be no assurance that any additional financing or strategic transactions will be available to us on acceptable terms, if at all. If events or circumstances occur such that we do not obtain additional funding, we may need to delay, reduce or eliminate our product development or future commercialization efforts, which could have a material adverse effect on our business, results of operations or financial condition. Further, if we raise funds through licensing or other commercial arrangements with third parties, we may be required to relinquish valuable rights to our technology, future revenue streams, research programs or drug candidates or may be required to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.
Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated (in thousands):
Nine Months Ended September 30,
2026
2025
Net cash used in operating activities
$
(38,827)
$
(42,270)
Net cash provided by investing activities
16,499
43,740
Net cash provided by financing activities
21,923
19,220
Net increase (decrease) in cash and cash equivalents
$
(405)
$
20,690
Operating Activities
Net cash used in operating activities was $38.8 million for the nine months ended September 30, 2026, which primarily related to our net loss of $48.3 million and a $4.3 million change in operating assets and liabilities, partially offset by $13.8 million of noncash charges for stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and noncash operating lease expense. Net cash used in operating activities was $42.3 million for the nine months ended September 30, 2025, which primarily related to our net loss of $44.8 million and a $5.3 million change in operating assets and liabilities, partially offset by $7.8 million of non-cash charges for stock-based compensation, depreciation and amortization, accretion of premiums/discounts on investments, and non-cash operating lease expense.
Investing Activities
Net cash provided by investing activities was $16.5 million for the nine months ended September 30, 2026, which related to $175.8 million of sales and maturities of marketable securities, partially offset by $158.9 million of purchases of marketable securities and $0.3 million for purchases of property and equipment. Net cash provided by investing activities was $43.7 million for the nine months ended September 30, 2025, which related to $121.7 million of sales and maturities
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of marketable securities, partially offset by $77.8 million of purchases of marketable securities and $0.2 million for purchases of property and equipment.
Financing Activities
Net cash provided by financing activities was approximately $21.9 million for the nine months ended September 30, 2026, which was primarily related to $19.4 million of net proceeds from the issuance and sale of Class A common stock pursuant to the Amended ATM Sales Agreement, $1.8 million of proceeds from the exercise of stock options, and $0.8 million of proceeds from the employee stock purchase plan, partially offset by $0.1 million in payments of deferred offering costs. Net cash provided by financing activities was $19.2 million for the nine months ended September 30, 2025, which was primarily related to $19.0 million of proceeds from the issuance and sale of Class A common stock pursuant to the Amended ATM Sales Agreement, $0.3 million of proceeds from the employee stock purchase plan, and $0.2 million of proceeds from the exercise of stock options, partially offset by $0.3 million in payments of deferred offering costs.
Funding Requirements
We expect our operating expenses to significantly increase as we continue to develop and seek regulatory approvals for our drug candidates, engage in other research and development activities to expand our pipeline of drug candidates, expand our operations and headcount, maintain and expand our intellectual property portfolio, and, if we obtain approval for one or more of our drug candidates, launch commercial activities. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and our actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing our drug candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.
Our future capital requirements will depend on many factors, including:
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the type, number, scope, progress, expansions, results, costs and timing of, our clinical trials and preclinical studies for our drug candidates or other potential drug candidates or indications which we are pursuing or may choose to pursue in the future;
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the outcome, timing and costs of regulatory review of our drug candidates;
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the costs and timing of manufacturing for our drug candidates;
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the costs of continuing to satisfy our obligations as a public company, including internal controls over financial reporting;
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the costs associated with hiring additional personnel and consultants as our preclinical and clinical activities expand;
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the costs and timing of establishing or securing manufacturing facilities for our drug candidates;
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the costs and timing of establishing sales and marketing capabilities if any of our drug candidates are approved;
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our ability to establish and maintain strategic collaborations, licensing or other arrangements;
•
the financial terms of any such agreements that we may enter into;
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our decision to elect to fund a portion of Phase 3 and subsequent development costs for PIPE-307;
•
the costs of obtaining, maintaining and enforcing our patent and other intellectual property rights; and
•
costs associated with any drug candidates, products or technologies that we may in-license or acquire.
Until such time as we can generate significant revenue from sales of our drug candidates, if ever, we expect to finance our cash needs through public or private equity or debt financings or other commercial arrangements, including collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties. We may be unable to raise additional funds or enter into such commercial arrangements when needed, on favorable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation
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or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may be required to relinquish valuable rights to our drug candidates, future revenue streams or research programs or may be required to grant licenses on terms that may not be favorable to us and may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings or through commercial arrangements when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our drug candidates even if we would otherwise prefer to develop and market such drug candidates ourselves.
Contractual Obligations and Commitments
Our contractual obligations and commitments relate to our operating leases that relate primarily to our leases of office and laboratory space in San Diego, California and leased equipment used in connection with our on-going Phase 2 clinical trial of PIPE-791 for the treatment of IPF. Our total contractual commitments for our lease agreements amount to approximately $6.9 million as of September 30, 2026.
We enter into contracts in the normal course of business for contract research services, contract manufacturing services, professional services and other services and products for operating purposes. These contracts generally provide for termination after a notice period, and, therefore, are cancelable contracts and not included in the table above.
Off-Balance Sheet Arrangements
During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules and regulations of the SEC.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenue, and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates and judgments, including those related to the accrual of research and development expenses; stock-based compensation, and common stock valuation. We base our estimates and assumptions on historical experience, known trends and events, and various other factors that we believe are reasonable and appropriate under the circumstances, the results of which form the basis for making judgments about the carrying values of our assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting estimates from those described under our “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Judgments and Estimates” included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Emerging growth company and smaller reporting company status
We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period under the JOBS Act until the earlier of the date we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. We will remain an emerging growth company until the earliest to occur of: (i) the last day of the fiscal year in which we have more than $1.235 billion in annual gross revenue; (ii) the date we qualify as a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, with at least $700 million of equity securities held by non-affiliates; (iii) the issuance, in any three-year period, by us of more than $1.0 billion in non-convertible debt securities; or (iv) December 31, 2029, the last day of the fiscal year ending after the fifth anniversary of our IPO.
We are also a “smaller reporting company” as defined in the Exchange Act. Even after we no longer qualify as an emerging growth company, we may continue to qualify as a “smaller reporting company,” which would allow us to take
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advantage of many of the same exemptions from disclosure requirements, if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, our management with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2026. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2026, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the quarter ended September 30, 2026, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in various legal proceedings and claims that arise in the ordinary course of our business activities. We are not currently a party to any material legal proceedings. Regardless of the outcome, litigation could have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors.
Item 1A. Risk Factors.
Investing in our common stock is speculative and involves a high degree of risk. Before investing in our common stock, you should consider carefully the risks and uncertainties described below, together with the other information contained in this report, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes, before investing in our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. If any of the following risks occur, our business, financial condition, results of operations and future growth prospects could be materially and adversely affected. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment. This report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below. See “Special Note Regarding Forward-Looking Statements” elsewhere in this report.
The risk factors below that we have marked with an asterisk (*) reflect substantive changes from, or additions to, the risks described under Part I, Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed on March 5, 2026. These changes reflect our clinical and regulatory updates and other matters occurring after the date we filed our Annual Report on Form 10-K for the year ended December 31, 2025.
Risks Related to Development, Clinical Testing, and Regulatory Approval
We are heavily dependent on the success of PIPE-791, our lead drug candidate, which is in the early stages of clinical development. If PIPE-791, PIPE-307 or our other drug candidates do not progress through clinical development, eventually receive regulatory approval or, even if approved, are not successfully commercialized, our business will be materially adversely harmed.*
We currently have no products that are approved for commercial sale and may never be able to develop a marketable product. To date, we have invested a significant portion of our efforts and financial resources on the development of PIPE-791 and PIPE-307. We wholly-own, and are pursuing the clinical development of, PIPE-791 for the treatment of idiopathic pulmonary fibrosis (“IPF”). In the first quarter of 2026, we initiated patient dosing in PROPEL-IPF, our global Phase 2 clinical trial of PIPE-791 for the treatment of IPF. As of October 10, 2026, we have received regulatory authorization to conduct the trial in 25 countries, including in the European Union, the United Kingdom, Japan, Australia, Canada, South Korea and Taiwan, and have opened more than 100 clinical sites. In the fourth quarter of 2025, we completed enrollment in an exploratory PIPE-791 Phase 1b clinical trial for the treatment of chronic pain associated with two separate indications, chronic osteoarthritis pain (“COAP”) and chronic lower back pain (“CLBP”). In April 2026, we reported topline data from this trial, which met its primary objective of assessing safety and tolerability. Although patients treated with PIPE-791 in this Phase 1b clinical trial generally demonstrated improvements from baseline in pain that were numerically greater than those in the placebo arm, the trial was exploratory in nature and was not designed or powered to demonstrate statistically significant efficacy. We believe these data support further evaluation of PIPE-791 for the potential treatment of chronic pain, but we are prioritizing the allocation of our capital and clinical development resources to PROPEL-IPF, and we have not determined whether, when, or on what terms we will further develop PIPE-791 for chronic pain, if at all. In February 2023, we entered into a license agreement (the “J&J License Agreement”) with an affiliate of Johnson & Johnson (“J&J”) pursuant to which we granted J&J an exclusive, worldwide license to develop, manufacture and commercialize PIPE-307 in all indications in exchange for an upfront payment and the right to receive future milestone payments and royalties. In December 2024, J&J initiated a Phase 2 MOONLIGHT-1 trial of PIPE-307 to evaluate the efficacy, safety, and tolerability of PIPE-307 as a monotherapy in adult participants with major depressive disorder (“MDD”). J&J completed enrollment of 105 adult participants in the MOONLIGHT-1 trial in June 2026. In September 2026, we announced that J&J reported to us that the MOONLIGHT-1 trial did not achieve its primary efficacy endpoint, which evaluated improvement from baseline in the Montgomery-Åsberg Depression Rating Scale (“MADRS”) total score
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at Day 5 compared with placebo. PIPE-307 was well-tolerated in the trial, with no new safety signals observed. J&J informed us that it is evaluating the MOONLIGHT-1 data, including data related to prespecified exploratory endpoints, to inform next steps for PIPE-307. J&J may determine not to continue development of PIPE-307 for MDD or any other indication. Previously, we reported topline data from our Phase 2 VISTA trial of PIPE-307 for the treatment of patients with relapsing-remitting multiple sclerosis (“RRMS”) in November 2025. The trial demonstrated acceptable safety and tolerability at both doses that were investigated in the trial. The trial did not meet its prespecified primary and secondary efficacy endpoints. J&J has sole discretion whether or not to further develop PIPE-307 for RRMS, MDD or any other indication. Our future success is, therefore, dependent on our ability to successfully complete clinical development for, obtain regulatory approval for, and successfully commercialize PIPE-791 for IPF. We cannot be certain that we will be able to successfully complete any of these activities or that, even if PIPE-791 receives regulatory approval, it will be able to successfully compete against therapies and technologies offered by other companies. Further, we cannot be certain that J&J will elect to further develop PIPE-307, and even if it does, that it will successfully complete clinical development for, obtain regulatory approval for, or successfully commercialize PIPE-307 in any indication.
The research, testing, manufacturing, labeling, approval, sale, packaging, marketing, and distribution of drug products are subject to extensive regulation by the FDA and comparable regulatory authorities in other countries. We are not permitted to market or sell PIPE-791, and J&J will not be permitted to market or sell PIPE-307, in the United States until we or J&J, as applicable, receive approval of an NDA from the FDA for such drug candidate. Further, we are not permitted to market or sell PIPE-791, and J&J will not be permitted to market or sell PIPE-307, in any foreign countries until we or J&J, as applicable, receive the requisite approvals from such countries. Neither we nor J&J have submitted an NDA to the FDA or comparable applications to other regulatory authorities for PIPE-791 or PIPE-307, respectively, in any indication. Neither party will be in a position to do so for several years, if ever. If we are unable to obtain the necessary regulatory approvals for PIPE-791 in any country, we will not be able to commercialize such drug candidate in that country. Similarly, if J&J is unable to obtain the necessary regulatory approvals for PIPE-307 in any country, it will not be able to commercialize such drug candidate in that country. In both cases, our financial position will be materially adversely affected, and we may not be able to generate sufficient revenue to continue our business.
Clinical drug development is a lengthy, expensive and risky process with uncertain timelines and uncertain outcomes. The results of earlier preclinical studies and clinical trials, including those conducted by third parties, may not be predictive of future results. If clinical trials for the drug candidates we develop do not meet safety or efficacy endpoints or are prolonged or delayed, these drug candidates may not receive the required regulatory approvals, and therefore could not be commercialized on a timely basis or at all. Further, the results of our preclinical studies, clinical trials, or analyses may not be indicative of results that may be obtained in later trials.*
Before obtaining marketing approval from regulatory authorities for the sale of the drug candidates we develop, these drug candidates must undergo extensive clinical trials to demonstrate their safety and efficacy in humans. The research and development of drugs is extremely risky. Only a small percentage of drug candidates that enter the clinical development process ever receive marketing approval. Failure or delay can occur at any time during the clinical trial process. To date, we have focused substantially all of our efforts and financial resources on identifying, acquiring, and developing drug candidates, including conducting preclinical studies and early-stage clinical trials. Clinical testing is expensive and can take many years to complete, and we cannot be certain that any clinical trials for the drug candidates we develop will be conducted as planned or completed on schedule, if at all. Our inability to successfully complete preclinical and clinical development for PIPE-791 could result in additional costs to us and negatively impact our ability to generate revenue. Similarly, if J&J elects not to pursue or cannot successfully complete preclinical and clinical development for PIPE-307, we will not be eligible to receive future milestone payments or royalties under the J&J License Agreement. As a result, our future success is primarily dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize PIPE-791 and J&J’s election and ability to successfully develop, obtain regulatory approval for, and then successfully commercialize PIPE-307. We currently generate no revenues from sales of any products, and we may never be able to develop or commercialize a marketable product. Further, we may never receive additional milestone payments or royalties under the J&J License Agreement.
Our only active clinical trial is our PROPEL-IPF Phase 2 clinical trial of PIPE-791 for the treatment of IPF. The results from our preclinical studies and the early clinical trials for PIPE-791 may not be predictive of the results of PROPEL-IPF or any later-stage clinical trials conducted for PIPE-791 in IPF or for any other indication. In addition, results of third-party studies, as well as our evaluations of third-party compounds, may not be predictive of results for our other drug candidates. Drug candidates in clinical trials, including PIPE-791 and PIPE-307, may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and early-stage clinical trials. For example, the Phase 2 MOONLIGHT-1 and VISTA clinical trials of PIPE-307 did not achieve their respective primary efficacy
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endpoints despite Phase 1 trial data for PIPE-307 supporting these trials. In addition, conclusions based on promising data from analyses of earlier clinical trial results may be shown to be incorrect in subsequent clinical trials that have pre-specified end points or may not be considered adequate by regulatory authorities.
Even if the current and anticipated clinical trials for PIPE-791 and PIPE-307 are completed as planned, we cannot be certain that their results will support the safety and efficacy requirements sufficient to pursue later clinical trials and eventually obtain regulatory approval, and, as a result, we may never generate commercial revenues from these drug candidates. Moreover, if we or J&J are not able to differentiate PIPE-791 and PIPE-307, respectively, against other approved products for the indications being targeted for PIPE-791 and PIPE-307, or if any of the other circumstances described above occur, our business would be materially harmed and our ability to generate revenue from these drug candidates would be severely impaired.
Clinical trial failure may result from a multitude of factors including flaws in trial design, dose selection, placebo effect, patient enrollment criteria, relatively smaller sample size in earlier clinical trials, and failure to demonstrate favorable safety or efficacy traits. As such, failure in clinical trials can occur at any stage of testing. A number of companies in the biopharmaceutical industry have suffered setbacks in the advancement of clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials, and we cannot be certain that we will not face similar setbacks. Based upon negative or inconclusive results, we may decide, or regulators may require us, to conduct additional clinical trials or preclinical studies or halt further clinical investigation. In addition, data obtained from clinical trials are susceptible to varying interpretations, and regulators may not interpret the data from these trials as favorably as we do, which may further delay, limit or prevent marketing approval. Furthermore, as more drug candidates within a particular class of drugs proceed through clinical development to regulatory review and approval, the amount and type of clinical data that may be required by regulatory authorities may increase or change. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and preliminary or interim results of a clinical trial do not necessarily predict final results. For example, PIPE-791 and/or PIPE-307 may fail to show the desired safety and efficacy in clinical development despite positive results in preclinical studies, or having successfully advanced through early-stage clinical trials. The failure of any drug candidate to demonstrate safety and efficacy in any clinical trial or for any indication could negatively impact the perception of the use of this drug candidate to treat other indications and the perception of any other drug candidate we develop (and therefore hinder the ability to successfully move forward with the development of the drug candidate in other indications or the development of our other drug candidates) or cause regulatory authorities to require additional testing before approving any of the drug candidates we develop.
We may experience delays in initiating and successfully completing the clinical trials that we intend to conduct, including our current and planned clinical trials for PIPE-791. Any delays in initiating and successfully completing our clinical trials could increase our costs, slow the development and approval process and harm the commercial prospects of our drug candidates. Similarly, if J&J elects to further develop PIPE-307, it may experience delays in initiating and completing any future clinical trials it conducts, which would delay our receipt of potential milestone payments or royalties under the J&J License Agreement. Any of these occurrences could materially harm our business, financial condition and results of operations.*
We may experience delays in initiating and completing any clinical trials that we intend to conduct, including PROPEL-IPF and our planned future clinical trials for PIPE-791, and we do not know whether our clinical trials will begin on time, need to be redesigned, enroll sufficient numbers of patients on time, or be completed on schedule, or at all. J&J will face similar concerns if it elects to conduct future clinical trials for PIPE-307. A clinical trial can be delayed for a variety of reasons, including delays related to:
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the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of the clinical trial;
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obtaining regulatory approval to commence the clinical trial;
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reaching an agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
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obtaining IRB approval at each site within the United States or IEC or other approval at sites outside the United States;
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•
recruiting suitable patients to participate in the clinical trial in a timely manner and in sufficient numbers;
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having patients complete the clinical trial or return for post-treatment follow-up;
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imposition of a clinical hold by regulatory authorities, including as a result of unforeseen safety issues or side effects or failure of clinical trial sites or investigators to adhere to regulatory requirements or follow trial protocols;
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clinical sites or investigators deviating from the clinical trial protocol or dropping out of the clinical trial, potentially necessitating the addition of new sites or investigators;
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third-party contractors failing to comply with regulatory requirements or meet their contractual obligations in a timely manner, or at all, or deviating from the clinical trial protocol;
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addressing patient safety concerns that arise during the clinical trial, including a decision by the initiating party, regulatory authorities, or IRBs, IECs or other relevant entities to suspend or terminate the clinical trial;
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adding a sufficient number of clinical trial sites;
•
increased or unforeseeable costs in conducting a clinical trial;
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timely manufacturing sufficient quantities of a drug candidate, and accessing sufficient quantities of other materials (e.g. placebo, equipment) for use in the clinical trial; and
•
potential disruptions caused by public health emergencies (“PHEs”) such as COVID-19, including difficulties in initiating clinical sites, enrolling and retaining participants, diversion of healthcare resources away from clinical trials, travel or quarantine policies that may be implemented, and other factors.
We commenced our international Phase 2 clinical trial (PROPEL-IPF) examining the safety and efficacy of PIPE-791 in IPF participants in the first quarter of 2026. As of October 21, 2026, we have received regulatory authorization to conduct the trial in 25 countries, including in the European Union, the United Kingdom, Japan, Australia, Canada, South Korea and Taiwan, and have opened more than 100 clinical sites. These regulatory authorizations were granted following review by the regulatory authorities in each of these countries of our available data package, including our preclinical and Phase 1 data on PIPE-791. We intend to continue adding additional countries and sites as we obtain required authorizations. We have engaged in pre-IND discussions with the FDA regarding the PROPEL-IPF trial. During these discussions, the FDA expressed concerns about LPAR1 antagonists and the potential for adverse effects related to blood pressure. The FDA indicated its concerns were informed by data from other programs and recommended we collect additional clinical data to further analyze whether similar risks exist with respect to PIPE-791. To date, we have not identified any clinically-relevant adverse safety signals related to PIPE-791 in our completed clinical trials, including with respect to blood pressure. As our development program advances, we intend to collect much of the safety data the FDA recommended we collect through our ongoing PROPEL-IPF trial and other planned clinical trials and studies. We believe the data generated through these trials and studies, if completed, will provide additional safety data in patients with IPF supportive of enabling future clinical trials that include clinical sites in the United States. There is no guarantee that our efforts to gather this additional safety data will be successful or that any data we gather will be favorable or deemed sufficient by the FDA. The FDA may require us to conduct additional studies or clinical trials or provide additional patient data, which could be costly, time-consuming and difficult to complete. We will continue to engage with the FDA on our proposed data package and approach, but until we have aligned our approach with the FDA, we cannot be sure that any additional data package or approach will result in the FDA allowing us to commence our PROPEL-IPF trial or any other pulmonary fibrosis clinical trial in the United States. Based on enrollment to date at our clinical sites outside the United States, we do not currently expect a delay in the anticipated timing for the completion of PROPEL-IPF if we are not able to include clinical sites in the United States in this clinical trial. However, if we are unable to eventually obtain clearance from the FDA to include clinical sites in the United States in PROPEL-IPF or in future clinical trials, or if obtaining such clearance is delayed, our planned Phase 3 development of PIPE-791 in the United States could be delayed, our development costs could increase, our ability to get FDA approval of a potential future NDA for PIPE-791 could be delayed or jeopardized altogether, and our IPF market opportunity may be adversely affected.
A clinical trial may be suspended or terminated by the initiating party, the IRBs or IECs of the institutions in which such clinical trial is being conducted, the FDA or other regulatory authorities, or recommended for termination by a Data
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and Safety Monitoring Board (“DSMB”) for such trial. Such authorities may impose a suspension or termination or recommend an alteration due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements, such as GCP requirements, or the clinical trial protocols, inspection of the clinical trial operations or clinical trial site by the FDA or other regulatory authorities resulting in significant inspectional observations or the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions, or lack of adequate funding to continue the clinical trial.
Furthermore, we rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials and, while we have agreements governing their committed activities, we have limited influence over their actual performance, as described in the section titled “—Risks related to our dependence on third parties.”
If the commencement or completion of any clinical trials for PIPE-791 or any of our future drug candidates is delayed, or if a clinical trial is terminated prior to completion, the commercial prospects of the applicable drug candidate could be harmed, and our ability to generate revenues or royalties from such drug candidate may be delayed. In addition, any delays in our clinical trials could increase our costs, slow the development and approval process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences could materially harm our business, financial condition and results of operations. In addition, many of the factors that may cause, or lead to, a delay in the commencement or completion of a clinical trial may also ultimately lead to the denial of regulatory approval of the applicable drug candidate.
Principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA. The FDA may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of a clinical trial. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site, and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of marketing approval of a drug candidate.
The regulatory approval processes of the FDA and comparable foreign regulatory authorities are unpredictable, lengthy, and time-consuming, and if we are ultimately unable to obtain regulatory approval to commercialize PIPE-791 or any other drug candidates that we develop or if J&J elects to not continue to develop PIPE-307 or is unable to obtain regulatory approval to commercialize it, our business will be substantially harmed.*
The time required to obtain approval by the FDA and comparable foreign regulatory authorities to commercialize a drug is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the indication being studied, the available data and the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval for an indication may change during a drug candidate’s clinical development and may vary among jurisdictions. We have not obtained regulatory approval for PIPE-791, and J&J has not obtained regulatory approval for PIPE-307. It is possible that neither of these drug candidates or any future drug candidates we elect to develop will receive the regulatory approvals required for commercialization. We are not permitted to market PIPE-791 or any other drug candidates that we develop in the United States until we receive approval of an NDA from the FDA. Similarly, if J&J elects to continue to develop PIPE-307, it will not be permitted to market PIPE-307 in the United States until it receives approval of an NDA from the FDA.
Prior to obtaining approval to commercialize a drug candidate in the United States or abroad, the initiating party must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA or comparable foreign regulatory authority, that such drug candidate is safe and effective for its intended indication. In addition, data obtained from preclinical trials and clinical trials are susceptible to varying interpretations, and regulatory authorities may not interpret this data as favorably as the initiating party, which may further delay, limit, or prevent development efforts, clinical trials, or marketing approval. For example, even if we believe the preclinical and clinical data for PIPE-791 in an indication is promising, such data may not be sufficient to support approval by the FDA and other comparable regulatory authorities for this indication. Furthermore, as more competing drug candidates within a class of drugs proceed through clinical development to regulatory review and approval, the amount and type of clinical data that may be required by regulatory authorities may increase or change.
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The FDA or any foreign regulatory authority can delay, limit, or deny approval of PIPE-791, PIPE-307 or any other drug candidates that we elect to develop for any indication, or require us or J&J, as applicable, to conduct additional preclinical or clinical testing or abandon a program for many reasons, including:
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the initiating party may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a drug candidate is safe and effective for its proposed indication;
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serious and unexpected drug-related side effects experienced by participants in a clinical trial or by individuals using drugs similar to the drug candidate being studied in the clinical trial, or other products containing an active ingredient in such drug candidate;
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negative or ambiguous results from a clinical trial or results that may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;
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the inability to demonstrate that a drug candidate’s clinical and other benefits outweigh its safety risks;
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the FDA or comparable foreign regulatory authorities may disagree with the interpretation of data from preclinical studies or clinical trials or determine that any information we submit is not sufficient to support market approval;
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the data collected from clinical trials may not be acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere, and the initiating party may be required to conduct additional clinical trials;
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the FDA’s or the applicable foreign regulatory authority’s disagreement regarding the formulation, the labeling, and/or the specifications of a drug candidate;
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the FDA or comparable foreign regulatory authorities may fail to approve or find deficiencies with the manufacturing processes or facilities of third-party manufacturers that produced the drug candidate for use in the clinical trials; and
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the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering the clinical data insufficient for approval.
Of the large number of drugs in development, only a small percentage successfully complete the regulatory approval processes and are commercialized. The lengthy approval process, as well as the unpredictability of future clinical trial results, may result in the failure of PIPE-791 to obtain the required regulatory approvals for commercialization in any indication, which would significantly harm our business, results of operations and prospects. Further, if J&J elects to continue to develop PIPE-307, its failure to eventually obtain the required regulatory approvals for commercialization of PIPE-307 would harm our business.
In addition, the FDA or the applicable foreign regulatory authority also may approve a drug candidate for a more limited indication or patient population than originally requested, and the FDA or applicable foreign regulatory authority may approve a drug candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that drug candidate. Any of the foregoing circumstances could materially harm the commercial prospects for the drug candidates we develop and our business.
We may not be successful in our efforts to identify and develop additional drug candidates or identify additional indications for the treatment of inflammatory and fibrotic diseases. Due to our limited resources and access to capital, we must prioritize development of a limited number of drug candidates, the choice of which may prove to be wrong and adversely affect our business and prospects
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*
In addition to IPF, we have and intend to continue to explore the development of PIPE-791 in other indications, including chronic pain. We also may elect to explore additional drug candidates based on our clinical translational approach and drug development efforts. In July 2026, we announced that we streamlined our discovery programs to focus on drug candidates for the treatment of inflammatory and fibrotic diseases, which resulted in a reduction of our research workforce. This narrower focus may cause us to forgo research and development opportunities in other therapeutic areas that could prove to have greater commercial potential or a greater likelihood of success. In each case, we may fail to successfully identify additional indications for PIPE-791 or identify and develop viable new drug candidates for clinical
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development. If we fail to identify additional indications for PIPE-791 or additional potential drug candidates, our business and growth plans could be materially harmed. Further, J&J may elect to not pursue further development of PIPE-307 for RRMS, MDD or any other indication.
Research programs to develop additional indications for our existing drug candidates and to develop additional drug candidates based on our clinical translational approach require substantial technical, financial, and human resources whether or not they are ultimately successful. Our research programs may initially show promise in identifying potential indications or drug candidates, yet fail to yield results for clinical development for several reasons, including:
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the research and development approach we use may not be successful in identifying potential indications or drug candidates;
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potential drug candidates may, after further study, be shown to have harmful or unexpected adverse effects or other characteristics that indicate they are unlikely to be effective drugs; or
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it may take greater human and financial resources than we possess to identify additional therapeutic opportunities for our drug candidates or to develop suitable potential drug candidates through internal research programs, thereby limiting our ability to develop, diversify, and expand our product portfolio.
Because we have limited financial and human resources, we intend to focus on research programs and drug candidates on a limited number of disease indications. As a result, we may forgo or delay pursuit of opportunities with other drug candidates or for other indications that could have greater commercial potential or a greater likelihood of success. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.
Accordingly, there can be no assurance that we will ever be able to identify additional therapeutic opportunities for our drug candidates or to develop suitable potential drug candidates through our internal research and development programs, which could materially adversely affect our future growth and prospects. We may focus our efforts and resources on potential drug candidates or other potential programs that ultimately prove to be unsuccessful.
We have conducted, are conducting and may continue to conduct clinical trials outside of the United States. The FDA and other regulatory authorities or ethics committees may not accept data from such trials, in which case our development plans will be delayed, which could materially harm our business and financial condition.*
We have previously conducted clinical trials outside of the United States, including our Phase 1 clinical trial of PIPE-307, which was conducted under authorization of the Australian Therapeutic Goods Administration (“TGA”) and the National Health and Medical Research Council (“NHMRC”) in Australia and both a Phase 1b PET study of PIPE-307 as well as a Phase 1b PET clinical trial for PIPE-791 in IPF and progressive multiple sclerosis (“PrMS”), which were conducted under the authorization of the Research Ethics Committee (“REC”) and the Medicines and Healthcare products Regulatory Agency (“MHRA”) in the United Kingdom. In the first quarter of 2026, we initiated patient dosing in PROPEL-IPF, our global Phase 2 clinical trial of PIPE-791 for the treatment of IPF. As of October 10, 2026, we have received regulatory authorization to conduct the trial in 25 countries, including in the European Union, the United Kingdom, Japan, Australia, Canada, South Korea and Taiwan, and have opened more than 100 clinical sites. We also plan to conduct additional clinical trials outside the United States in the future. Although the FDA and other foreign regulatory authorities may accept data from clinical trials conducted outside the United States, acceptance of this data is subject to certain conditions imposed by these regulators. For example, non-clinical toxicology studies for our Phase 1b PET study of PIPE-307 were performed in China that were not GLP compliant and – as China is not a signatory on the Organization for Economic Co-operation and Development (“OECD”), Mutual Acceptance of Data system, a multilateral agreement that allows participating countries to share the results of various non-clinical tests performed using OECD methods and principles – the non-clinical data were not considered acceptable to support the trial. While the Phase 1b was approved on the basis of clinical safety data, the MHRA stated that prior to Marketing Authorization Approval of PIPE-307 in the United Kingdom, an inspection or further evaluation could be triggered. Further, in cases where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice; and (ii) the trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations. In general, the patient population for any clinical trials conducted outside the United States must be representative of the population for whom we intend to label the drug candidate in the United States. Additionally, the FDA’s clinical trial requirements, including sufficient size of patient populations and statistical powering, must be met.
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Many foreign regulatory authorities have similar approval requirements for clinical trials. In addition, such trials would be subject to the applicable local laws of the foreign jurisdictions where the trials are conducted. Further, the FDA must be able to validate the data from the clinical trial through an onsite inspection if it deems such inspection necessary. In addition, when clinical trials are conducted only at sites outside of the United States, such trials may not be subject to IND review, meaning the FDA may not provide advance comment on the clinical protocols for the trials, and therefore there is an additional potential risk that the FDA could determine that the trial design or protocol for a non-U.S. clinical trial was inadequate, which would likely require an additional clinical trial in order to obtain FDA approval. If the FDA does not accept data from any clinical trials we conduct outside the United States, it would likely result in the need for additional clinical trials, which would be costly and time consuming and delay our drug development plans, which could materially harm